CNN: “China’s deflation problems get worse”
Oh yeah, cheaper stuff is such a “problem”. I’m sure glad we don’t have that problem here, so glad we have a healthy inflation instead. I love it when i can buy less stuff than last year for the same money. But hey, the stock market is doing great, right?
Fortune/Bloomberg: “China’s struggles with supply glut threaten to extend deflation”
Oh no, China produces too much stuff! They are suffering from “supply glut”! Almost sounds like some terrible disease! How will they ever cope with an abundance of cheap goods? Doesn’t the Chinese government understand that they are taking away their people’s right to scarcity?
Reuters: “China’s deflationary pressures deepen in February”
It’s been a while since i got my degree in physics but from what i can recall usually “pressure” leads to inflation not deflation. Deflation sounds like it’s taking financial pressure off of people. But what do i know, i’m not one of these fancy economists who understand why higher prices is a good thing.
Some rag founded by the Prince of Liechtenstein (yes the “country” so small you need a magnifying glass to find it on the map): “China trapped in a cycle of deflation”
Maybe i’m not understanding how money works, but personally i’d love to be “trapped” in a cycle of the stuff i buy getting less and less expensive every year. Thank you, person writing for the “prince” of a village pretending to be a country, for enlightening me about how that is actually a bad thing.
I don’t agree that it necessarily follows that deflation leads to a drop in business/incomes. You can compensate for lower prices by just selling a higher volume of goods. And if you are also reducing costs of production at the same time (scaling up mass production, increasing productivity through automation) then you will even come out with a net increase in profits.
Of course at some point the market will be saturated, demand isn’t infinite, but it doesn’t need to be. You can invest in producing something new for which the market isn’t yet saturated.
The bigger underlying problem here is that we are just accepting to operate in this capitalist paradigm of chasing infinite growth, which is neither necessary nor possible. But that’s a whole other discussion…
As i have just argued, even in this capitalist framework where everything revolves around profitability, deflation is not necessarily a bad thing if it is driven by an abundance of productive capacity. In fact it’s exactly what should happen as technological and industrial capabilities advance. What is the point of an economy if not to maximize the availability and affordability of goods and services for as many people as possible?